As an employer, you must keep wage and time, and holidays and leave records that comply with the Employment Relations Act 2000 and the Holidays Act 2003. It sounds simple enough, but we all know that it’s often easier said than done. Most employers have a nagging concern that if audited there are likely to be a few gaps (or more than a few in many cases).
Earlier this year, a labour hire company working in the Waikato was fined $57,000 for failing to retain employment agreements or records of wage, time, holidays and leave. Stories like this are a sharp reminder for employers to address any gaps in employment documentation.
So, as a minimum, what do you need to keep on file?
- You must keep records for seven years – even if the employee has left. You can keep these records on paper or electronically, as long as the information can be accessed easily and converted into written form.
- For many businesses, your payroll system will keep the necessary wage, time, holiday and leave records. If you don’t have a system which contains this information, it is essential to keep your own accurate records.
- You must also keep a signed copy of each employee’s employment agreement, as well as current signed terms and conditions (if amended since the agreement was signed) and a clear description of all roles.
- In addition, it is recommended that you keep copies of work visas and drivers licences (if applicable), evidence of compliance with health and safety responsibilities, and contact details for each employee as well as their ‘in case of emergency’ contact.
What happens if you don’t keep employee records?
If you don’t have the required documentation, the Employment Relations Authority (ERA) or a Labour Inspector may issue an infringement fine. The minimum fine is set at $1000, with a maximum of $20,000 per three-month period if there are multiple breaches.
As well as being a legislative obligation, good record-keeping prevents misunderstandings and protects you and your employee if there is a problem. As such, it is also important to retain all documentation pertaining to performance and disciplinary processes and investigations, at least until such time as any formal warning expires. In a large proportion of cases before the Employment Relations Authority, although the outcome itself may be considered fair and reasonable, the employer has fallen short of the procedural requirements in running the disciplinary process. Hence, retaining evidence of your process is essential.
A recent example was an IT worker, awarded $40,000 after it was found that his employer did not provide all relevant information to him, conduct and/or document a thorough investigation process, or issue formal warnings prior to dismissal. Likewise, in July this year, a cruise ship engineer was awarded $44,000 in lost wages and compensation after the ERA found the dismissal process followed by the employer was flawed, and lacking evidence of a proper investigation or fair hearing.
Don’t get caught out! Please call us to discuss how we can help ensure your employee documentation is in order.